I'm an associate editor at Forbes, part of the team responsible for our signature issues: The Forbes 400, Global Billionaires and America's Richest Families. As a writer, I cover these wealthy business builders as well as other entrepreneurs. Before Forbes, I also reported on entrepreneurs for Inc. magazine, and attended Syracuse University's S.I. Newhouse School of Public Communications.

Same-store sales fell 26.1%, suggesting that J.C. Penney’s struggles to attract and keep customers continue. This is a key metric for retailers because it strips away volatile results from newly opened or closed stores.

“At first blush, the JCP print is not very pretty. At second blush, the JCP print might be even worse than the first blush,” says Deutsche Bank analyst Charles Grom. “Trends at J.C. Penney are obviously getting worse, not better, and we are becoming more and more convinced that sales in 2013 will also decline, which could lead to a going-concern problem next year.”

Revenue in the third quarter was $2.92 billion, beneath the $3.23 billion forecast by analysts. Gross margin fell to 32.5% from 37.4%.

The drop in same-store sales, which has occurred throughout the year, also highlights concerns about how badly J.C. Penney will perform during the key Christmas shopping season, a period where retailers gain a significant portion of annual sales. “I am sure many of you are wondering how we’re going to make it through the next eight weeks,” CEO Ron Johnson this morning told an audience of investors and analysts.

Shares of J.C. Penney closed down 5%.

“J.C. Penney is not a top destination and is nowhere near becoming a top destination in peak seasonal shopping periods,” says Brian Sozzi, chief equities analyst at NBG Production. “If these comp and margin run rates continue, J.C. Penney may have to raise capital or consider removing itself from the public markets—getting certainty of value for shareholders instead of staying public and hoping the turnaround brings to surface unrealized value.”

Johnson hopes an ambitious transformation of the 11o-year-old retailer—refreshing locations and creating a stores-within-a-store layout—will make it more competitive against Kohl’s and Macy’s, as well as Wal-Mart and Target.

Johnson, the former Apple Retail chief and Target executive, this morning described a split in the company: Customers dislike what the old J.C. Penney has become, but are upbeat about the new stores. The makeover includes wider aisles and sections devoted to individual brands centered around a cafe and lounge area; technology, like iPads and mobile checkout systems, also play a role. “I’m really leading two companies. One is J.C. Penney, a promotion department store. The other is JCP, a specialty department store,” says Johnson. “What’s going to be good for one is not going to be good for another.”

The plan for Christmas reflects Johnson’s mindset. J.C. Penney will feature free haircuts and family holiday portraits to attract customers—events that make J.C. Penney stores a place to visit and socialize as much as a shopping destination. J.C. Penney will also have a Black Friday sale; Johnson had sworn off one-time promotions, but said he didn’t want a Grinch-like atmosphere hanging over the department store.

Troublingly, sales are far down this year ($9.09 billion versus $11.84 billion a year ago) after J.C. Penney executed several dizzying transformative moves, deleting coupons and switching to a three-tier pricing method. The shift left customers confused and less keen on shopping there. Johnson would later publicly admit that he had misread J.C. Penney’s customers: “J.C. Penney has performed tougher than we expected this year.”

While the new J.C. Penney stores look good, analysts say, it may be challenging to attract the kinds of customers that Johnson wants and to keep a hold on the existing base. “We appreciate management’s willingness to enact changes, but it has proven a long road to developing the right tactics with a less promotional strategy,” says Baird analyst Erika Maschmeyer.

Johnson sees a 36-month time horizon toward completing the makeover. In that, he says, he hopes to generate as much cash as possible from the old model—dollars that will go to fuel the change. So far, J.C. Penney opened seven new stores in the past quarter based on the new model; some 7.2 million square feet has already received the new layout. J.C. Penney believes that the refreshed locations can drive far greater cash: an estimated $269 per square foot in new stores versus $134 in old ones. “We’re excited about 2013. Back to school next year: 40% of our stores will be converted. If we do our jobs right and we get that sales lift, you can imagine what will happen to the business in the back half of next year,” Johnson says.

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Since Ellen was hired at the same time that Fair & Square began there is no way to definitively conclude this. I believe the lack of media presence is the reason for the decline in sales. This is a visual culture and people rely on advertising to bring them to the marketplace. It’s just too big a part of our culture to completely remove yourself from if you’re a retailer. I thought right from the start that this was not a good move for JC Penney and a bad one for Ellen as well. Fair & Square was bound to fail because it was a misguided approach to begin with. People such as yourself predictably lay the blame for declining revenue at her feet when it most likely has much less to do with her than the Fair & Square policy.

While the boycott may have been a factor, I really don’t believe it is why JCP is going downhill so fast. I was always a big JCP fan for both my kids and myself. When they made the changes they not only changed prices but also quality. Why go to the mall and pay bigger $$ for the same quality t-shirt you can get from Walmart for a cheaper price.

I think the Board should seriously consider removing Mr. Johnson. From day one, I thought a man with Apple background, a Company that ran on innovations from Steve, Jobs was an extremely poor decision. Mistakes should be corrected promptly. One should learn from Kmart’s experience.

Yes, IF he pulls it off he’ll become a business school messiah. Otherwise, you’ll find him in the Index under “Pumpkin Heads.” The problem is that no matter how thoroughly JCP burns under his direction, he’ll still consider it a success. He’s irrational, so intent on his vision that he tells the people that they don’t really want what they want. This guy is a bullying huckster, a Steve Jobs clone to the core. Sadly, he doesn’t have the innovative products that Jobs had to play with, and he might be the worst thing that ever happened to JCP.